June 16, 2008

India, Pakistan, Iran Gas Pipeline Deadline Ends

Text of report headlined "45-Day Deadline on Gas Pipeline Ends" published by Indian newspaper The Hindu website on 16 June; sub- heading as published

New Delhi: With India, Pakistan and Iran failing to resolve their differences, the 45-day deadline to sort out the "safety and security issues" concerning the $ 7.4-billion gas pipeline project has expired.

During his one-day visit to India on April 29, Iranian President Mahmoud Ahmadinejad set the deadline to sort out all issues pertaining to the 2,700-km pipeline. However, there have been no talks with Iran on the safety and security of the pipeline raised by India during Mr. Ahmadinejad's visit. Nor has the transit fee issue with Pakistan been resolved.

The early clearance for the $ 22-billion Liquefied Natural Gas supply deal has been inter-linked with the gas pipeline and is hanging fire for almost three years now.

Risk of transit

Informed sources said India handed over "some points" to Mr. Ahmadinejad. It wanted Tehran to hand over the custody of gas at the India-Pakistan border and not at the Iran-Pakistan border, as suggested by Iran, to cut down the risk of transit through Pakistan.

India also opposed a price revision clause that Iran is seeking to insert in the Gas Sales Agreement. New Delhi wanted Tehran to dedicate a particular gas field like South Pars for the gas pipeline and sought third party certification of its reserves. It sought to know the alternative supply sources in the event of depletion of reserves.

India has been boycotting the pipeline talks since August 2007 over Pakistan's transit fee demand. Talks between New Delhi and Islamabad are stalled, with India offering to pay 15 cents per million British Thermal Units (mmBtu) against Pakistan's demand of 42 cents per mmBtu.

Although it was decided that the oil Ministers of the three nations would meet soon to resolve the issues concerning the pipeline, no progress has been reported till date.

External Affairs Minister Pranab Mukherjee is scheduled to visit Tehran on July 29-30 to attend the India-Iran Joint Commission meeting and is likely to take up the pipeline issue.

"It is time to give final shape to the project, which is very important from India's energy security point of view and the continued deficiency in natural gas supplies," commented a senior Indian official.

Originally published by The Hindu website, Chennai, in English 16 Jun 08.

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